Source Documents

Definition

A source document is the original piece of evidence that supports a journal entry. Without source documents the ledger is an assertion; with them it is auditable. ITA s.230(1) requires every corporation to keep records that are adequate to enable the taxes payable to be determined, and CRA interprets that to mean each material transaction must be traceable from the financial statements back to a supporting document.

Key rules

• Typical source documents include: supplier invoices, customer invoices, cash register tapes, point-of-sale reports, credit card statements, bank statements and deposit slips, signed contracts, lease agreements, legal correspondence, expense reimbursement claims, mileage logs, and payroll records.
• Input tax credit claims require specific information in the supplier's invoice. For supplies of $150 or more the invoice must show the supplier's name, the supplier's GST/HST number, the amount of tax charged, the date, and the purchaser's name. Lower-value supplies have reduced requirements but still require a vendor identifier and the tax amount or rate.
• Internally generated documents (journal vouchers, adjusting entry memos) must explain the business reason for the entry. Year-end adjusting entries should reference the calculation and the person who approved the entry.
• Contracts and legal documents are permanent records. Even after the six-year minimum, originals tied to ownership of capital property, share structure, or long-term obligations should be kept.
• Credit card statements alone are not sufficient support for a deductible expense. They show that a payment was made, but not what was purchased, which is why the underlying receipt is still required.

Example

A BC consulting corporation claims an ITC on a $1,200 laptop purchased for the business. The required supporting chain is:

If CRA reassesses the ITC claim, the corporation should be able to produce the first three items without effort.

Common mistakes

• Attaching only the bank or credit card statement and calling it support. CRA's audit manuals consistently reject this as insufficient.
• Keeping thermal-printed receipts in a shoebox. These fade within months. Scan them promptly or take a high-resolution photo.
• Using vendor emails as ITC support without verifying they contain the supplier's GST/HST number. If the number is missing, the ITC claim fails the Regulations test.
• Destroying contracts and legal documents on the six-year schedule. These are permanent records tied to the life of the corporation.
• Treating employee expense claims as source documents on their own. The employee's claim form is the internal voucher; the receipts attached to the claim are the real source documents.

Related concepts

Source documents are the base layer; they are retained under the Six-Year Retention Rule and can be stored digitally per Electronic Records. For the specific ITC rules see ITC Documentation Requirements. When CRA requests them, follow the playbook in Audit Readiness.